Friday, 2 March 2012

MoD slams door on private sector in submarine project

I took this photo last year at L&T's shipyard being built at Katupalli, near Ennore, Tamil Nadu. The yard, which is close to completion, marks L&T's emergence as a serious shipbuilder

by Ajai Shukla

Business Standard, 3rd Mar 12

The defence ministry (MoD) has ruled that no private sector shipyard in the country has the infrastructure and capability required for building the high-tech conventional submarines that the Indian Navy wants. The long-delayed Project 75I, to build six conventional submarines for an estimated Rs 30,000-35,000 crore, will be divided up between foreign shipyards and the defence public sector.

The Secretary Defence Production, Shekhar Agarwal, has told Business Standard that the ministry has decided that the first two Project 75I submarines will be built abroad by the foreign vendor that wins the MoD contract. The next four vessels will be built in India, in the two defence shipyards that have the infrastructure for building submarines: Mazagon Dock Limited, Mumbai (MDL); and Hindustan Shipyard Ltd, Visakhapatnam (HSL).

This decision is a blow to private sector shipyards, especially L&T, which is playing a major role in building the Arihant-class nuclear submarines; but also to ABG Shipyard and Pipavav Shipyard, which have invested lavishly on infrastructure. Three successive MoD committees have considered the thorny question of which shipyards can build a submarine. The latest, headed by V Krishnamurthy, Chairman of the National Manufacturing Competitiveness Council (NMCC), submitted a split opinion last year, which mentioned that L&T could also be considered.

“The MoD has examined the Krishnamurthy Committee report and decided that no private sector shipyard individually has the capability to build a submarine,” said Agarwal.

Contacted for a comment, L&T's defence business chief, MV Kotwal said "We have not been informed about any such development by the MoD. But if it is true, it is extremely surprising. We have informed the MoD already about the capabilities and capacities that we have put in place for submarine building. These have already been demonstrated in the Arihant project. L&T has the engineering and manufacturing capability needed for building submarines in India."

This decision was taken by the MoD’s apex Defence Acquisition Council (DAC) in January, says Agarwal. But, since it countermands an earlier CCS sanction, this will require sanction from the Cabinet Committee on Security (CCS). In 1999, the CCS had sanctioned the 30-Year Submarine Construction Plan for constructing 24 conventional submarines entirely in India. The latest MoD decision to build two submarines abroad runs contrary to this.

Business Standard has learned that the Indian Navy has argued forcefully for building the first two Project 75I submarines abroad. The navy hopes that this would forestall the delays that marred the ongoing Project 75, which involves constructing six Scorpene submarines in MDL, in partnership with Franco-Spanish consortium, Armaris (which was subsequently taken over by French shipbuilder, DCNS). The first Scorpene, which was to be delivered this year, will only be completed in 2015.

Top MoD sources apprehend that the CCS might be wary of okaying the proposal to build two submarines abroad. In 1999, the National Democratic Alliance (NDA) had regarded Indian shipbuilders capable of building 24 submarines in India. Thirteen years later, and with significant shipbuilding successes under its belt, including the indigenous production of a nuclear submarine, the CCS faces risks for any decision to build abroad?

The CCS also faces a difficult decision in sanctioning a fresh Transfer of Technology (ToT), which the navy insists upon. India has already obtained ToT thrice: from Germany for the HDW submarine line; from France, for the Scorpene; and, to an unclear extent, from Russia for the nuclear INS Arihant. The technology for Scorpene alone cost Rs 6000 crore. A fresh request for ToT risks accusations of failure in absorbing technology.

Senior naval officers who favour indigenisation point out that, when India bought the HDW Type 209 submarine in the 1980s, HDW built the first two submarines abroad. But the next two submarines, which were built in MDL, faced lengthy delays. Eventually, the MoD decided not to build any more, largely because of corruption allegations. Now the CCS will again have to recommend that construction model.

The MoD’s Acquisitions Wing is drafting a Project Note, which summarises these issues for the CCS. This effort has been under way for more than a month now.

The Scorpene is a 1,800-tonne submarine that can remain at sea for 40-50 days. A submarine traditionally lurks underwater, firing torpedoes to destroy enemy battleships. It dives as deep as 300 metres to evade detection, but its diesel-electric engines are not as silent, or have as much endurance, as the new “air-independent propulsion”, or AIP, that the navy wants in the new Project 75I submarines. India has an option to install AIP in the last two Scorpenes that MDL builds, and then retrofit AIP into the other four Scorpenes as well.

10 comments:

Anonymous
said...

this is very sad for india and how come l&t was not chosen it has shown it can fabricate nuclear sub components so why cant it build conventional subs which are relatively simpler..... Sir what happened with the jv of mdl and pipavav and other such jv's... I tell u its all about money

It looks like scam. Why is MOD not providing business for private sector even after repeatedly saying privatization of Defense in India is key to strengthen India Defense ASAP. A new Military corruption prioritized ANNA ji should appear to fix this problem with the UPA.

L&T should be given a chance to prove themselvesThey should'nt be judged upon their capabilities by any commiteeOn one hand mod talks to bring private players in arena and on the other it contradicts by wasting aspirations of private shipyardsMOD should convince navy to accept some delay cuz if private shipyards gain expertise they could bear more fruits for navy's basket

" ITS HIGH TIME FOR MOD TO STOP SHOWING STEP MOTHERLY TREATMENTS TO PRIVATE SECTORS IN THIS COUNTRY "Well not a Surprise for me. After all these years passed by, our Public Sector Ship yard (Well equipped) couldnt build a Conventional submarine. Even after a Transfer Of Technology by France.

"Given a chance, our Private sector would give them a run for their Money".They are Afraid....Sad News for Indias Defence Growth.

Please can you shed more light on the OFB manufacturing the Bofors howitzers? Real shame that although our procurement processes are notoriously slow, whatever study or due diligence is done - that also leaves much to be desired - that we realised only recently that we had a ToT arrangement with Bofors.. I know its easier to be clever in hindsight, but imagine the power of our artillery back in 1998 during Kargil when these guns proved so effective had this option been exercised by then. Would be great to hear your views on OFB's attempt at solving the howitzer issues faced by the Army.. Thanks & Regards

If the contracts go to Indian players the decisionmakers in the govt cannot get their cuts. They only preach patriotism to the common man and the soldier to go and die for the country while the people at the top sell the country from beneath their feet.